Former President Mohammad Khatami, who was a key supporter in Rouhani’s bid to become president, was not present at the ceremony.

"I want to restore hope to the Iranian people and fix the economy and get rid of these cruel sanctions,"Rouhani said after the ceremony, referring to the U.S.-led sanctions imposed on Iran over its disputed nuclear program.

Khamenei said Rouhani has expressed his desire to seek a "logical relationship" with the Western powers, "and I support him."

Rouhani reiterated that message on Sunday: "I want to engage with the West but with mutual respect and trust."

Officials in the West have watched Rouhani with the hope of more moderate leadership.

Under Ahmadinejad, Iran grew more isolated and came under stringent United Nations, U.S. and European Union sanctions over its nuclear program.

Rouhani won 50.7 percent of the vote in the June 14 election, making a second round of voting unnecessary.

Among the key nominees in Rouhani's proposed cabinet are veteran retired diplomat Mohammad Javad Zarif, tapped for the foreign ministry, and ex-oil minister Bijan Namdar Zanganeh for the same portfolio.

Zarif is American-educated, speaks fluent English and served from 2002 to 2007 as Iran’s ambassador to the United Nations.

Rouhani's proposed cabinet is largely made up of reform minded or moderate technocrats, many of whom served in the governments of former presidents Rafsanjani and Khatami. The parliament has 10 days to approve Rouhani's choice of ministers.

Iran's new President Hassan Rowhani appears on his first official day in office in Tehran on Saturday.Atta Kenare / AFP - Getty Images